Letter: Duke/Progress merger

I just read the article on the Duke Power negotiations to purchase the Eastern Municipal Power Authority shares. The article was very good, as far as it goes, however the back story on this is actually amazing.

I just read the article on the Duke Power negotiations to purchase the Eastern Municipal Power Authority shares. The article was very good, as far as it goes, however the back story on this is actually amazing.

As mayor of New Bern I decided that we were going to intervene in the merger in order to mitigate some of the damages caused by the merger. It was a tough decision to spend city money on this issue, but the potential gains for our city made it worth it. As mayor I had to convince the aldermen to pursue the vision. I eventually did convince them of the vision and let them know that I was willing to take the heat for the expense. I did this because New Bern, as one of the alleged “Electricities” pays 30 percent more on their electric bill than Progress/Duke customers. The extra 30 percent went to pay down the debt we owed ($142 million) for our 6.2 percent ownership in the power plants owned by Progress Energy in a contract entered into about 35 years ago. At that time Progress energy’s predecessor indicated that if the 32 rural cities did not provide the funds they would experience power outages and black outs. In fact, the power company could not afford to borrow money on the open market due to the high interest rates in the late 1970s and it appears to have frightened our small cities into financing their nuclear plants because the cities could obtain low interest loans. The original deal called for 4 nuclear power plants at a cost of $1 billion. It turned out that 1 nuclear power plant was built at a cost of $4 billion, and the debt was saddled on the backs of New Bern and other ENC cities. New Bern and the rest of the Electricities are still paying for the power plant, which Duke apparently owns.

As mayor I tried to organize all of the 32 Electricities to join New Bern in the intervention. Much to my chagrin, Bill Johnson (president of Progress Energy and who was to have been the CEO of the merged company with a salary in the tens of millions of dollars range — subsequently fired in less than a day as CEO of the merged corporation, and who walked away with a reported $30 million golden parachute) appeared at one of the Electricities meeting in Wilson, N.C. (invited there by Graham Edwards, president of Electricities). Johnson informed the mayors that if New Bern intervened and cost the Duke/Progress money or delayed the merger, that Duke/Progress would sue New Bern for hundreds of millions of dollars and that if any of the other cities decided to join New Bern they would be sued as well. The mayors were extremely frightened and upset with me for defying Electricities and especially Johnson. I stared across the table at a group of extremely red faced and agitated mayors who were probably believing that New Bern was going to make it worse by intervening.

Page 2 of 3 - Jon Rynne (director of New Bern’s Electric Department) and I high-tailed it out of the meeting dodging dirty looks and comments from the other cities.

As an attorney, I had done the research on the intervention, so at the end of Johnson’s speech, I simply told him that we were going to intervene. I then reported what I considered to be a threat to the Department of Justice in Washington D.C. Only Rocky Mount went with New Bern on the intervention.

While New Bern was intervening, I approached Graham Edwards, president of Electricities and asked him to join us. He told me that the merger would be great for Eastern North Carolina. I informed him that Dukes economic impact statement was flawed and that the merger would be horrible for ENC, which is already impoverished. Edwards was acting as a schill for the merging companies, and treated my offer with contempt. I informed him that New Bern would withdraw its intervention if the merged company would simply buy out our share of the debt. My suggestion was scoffed at by Duke and by electric cities. We kept pushing, throughout the merger process, for Duke simply to buy us out.

Meanwhile, back in New Bern, the citizens were getting antsy that we had spent nearly $350,000 on the intervention. I personally took a lot of heat, meeting after meeting, for spending that kind of money on the intervention. Our board of aldermen held fast and pressed on with the intervention. I had confidence that at some point the powers that be would realize that Electricities had outlived its purpose and that saddling 32 cities in impoverished ENC was a bad Idea and inequitable.

It would appear that the powers that be finally did see the light and are acting (1) reasonably by negotiating to purchase the electricities shares and (2) in this instance they are acting compassionately by lifting the debt off of our backs. Citizens of New Bern should write their legislators and encourage them to facilitate a reasonable solution to this situation. ENC has great potential. New Bern has great potential; however electric rates ranging from 30 to 42 percent higher in electricities has held this region back from realizing its full potential.

If the negotiation is successful it would potentially mean parity with Duke customers for New Bern. “Parity with Progress” was my initial mantra in the intervention.

New Bern had a vision and held fast to that vision. We fought a mega billion dollar merger. The little “crazy” voice shouting up at a giant was heard, and it appears that the giant is now listening.

My comment to the citizen of New Bern is that sometimes it takes loud and uncomfortable controversy to get things done. Multibillion dollar companies do not simply say yes when you ask them to purchase your share in a nuclear power plant for $142 million. They tend to fight; we did and I am proud of that fight.

Page 3 of 3 - My comment to Duke Energy (after all of the potentially antagonistic comments I made) is thank you for listening. Thank you on behalf of the citizens of New Bern and the Citizens of ENC.